‘growth at a reasonable price’

Caterpillar Inc (NYSE: CAT) on Friday said its Q4 profit and revenue topped Wall Street estimates. Shares still slipped 6.0% as the increase in costs eclipsed sales growth.

Key takeaways from Caterpillar’s Q4 results

Caterpillar reported $2.12 billion in net income or $3.91 per share versus the year-ago figure of $780 million or $1.42 per share. Adjusted for one-time items, the Fortune 100 company earned $2.69 a share in the fourth quarter.

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The construction machinery and equipment company generated $13.80 billion in revenue that represents an annualised growth of 22.8%, as per the earnings press release. According to FactSet, experts had forecast $2.26 of adjusted EPS on $13.17 billion in revenue.

At $10 billion, however, cost of sales climbed by an even higher 28.5% in the recent quarter. The FactSet consensus was for $9.21 billion. Sales were up 27% in Construction Industries, 19% in Energy & Transportation and 27% in Resource Industries.

The stock ended 2021 with a more than 10% gain.

Gina Sanchez: CAT is one of my top picks

Following market-beating results, Chantico Global’s Gina Sanchez picked CAT as one of her top stocks for 2022 to maintain exposure to growth. On CNBC’s “The Exchange”, she said:

Their growth has been extraordinary. Caterpillar is through this tumultuous open to the year. Right now, market’s killing everything that is overpriced. But Caterpillar is growth at a reasonable price. It’s a large profitable company that has the potential to ride through this growth cycle we’re experiencing.

Sanchez, however, agreed that a slowdown in China that Caterpillar signalled in its earnings report could be a hangover on the stock. Last month, Bernstein said CAT could climb to $240 a share that represents a 20% upside from here.